26 Mich. 353 | Mich. | 1873
The first task in examining this canse, is to ascertain as far as may be, the groundwork of the case as indicated by tbe bill, and get at the substance of tbe matter on which the complainants rest their claim for relief in a court of equity.
It is just as necessary for his success in chancery, that a complaining party should first state a definite and comprehensible case, and then prove it substantially as laid, as it is at law; and whenever doubts and uncertainties spring from indefinite or ambiguous statements in the hill, or from loose or incongruous proofs, they must generally be resolved adversely to tbe party to whose faulty or infirm proceedings they are owing; and if he bas a meritorious
It may be confessed that a careful study of the record leads to the belief that complainants have been hardly and unfairly dealt by, but this will not avail to warrant the court in decreeing, unless it appears that a determinate case for equitable cognizance is set up, and that the same case is substantially established by a preponderance of evidence.
Without recapitulating the bill, an attempt must be made to gather from it the essential and ultimate ground upon which the complainants now seek judicial intervention. But before doing this, a proper understanding of the matter, necessitates a general reference to certain preliminary business events which the bill details.
Prior to the 19th of September, 1857, the defendants, Lott Frost and Charles Bradley, composed the firm-of Frost & Bradley, and this firm held the legal title to two large steam saw mills, one at what is now called Bay City, and the other at St. Charles, on the Saginaw river. The firm also held the legal title to extensive tracts of pine lands not far distant, and owned three lake vessels, a large quantity of pine logs and lumber, a quantity of mei’chandise for traffic in connection with lumbering operations, and teams and implements for lumbering and manufacturing lumber. At the same time they held a short lease of a lumber yard at Chicago, and held some other personal property. For some time before and up to the time just
All the real estate so held by the firm, as well as the vessels, was heavily incumbered, and the firm was otherwise deeply indebted, and, as the bill claims, insolvent. Two of the vessels were subject to large mortgages given to C. & A. Ives of Detroit. The complainants were direct creditors of the firm to a limited amount, and were likewise liable on their account as sureties, in different forms, in the sum of between twenty and thirty thousand dollars, as-the bill states, for which there was no security, and in the further sum, as the bill also states, of about eleven thousand dollars in favor of C. & A. Ives, who held liens on the vessels as primary security.
Under these circumstances, which are related more at large in the bill, the firm, on the 19th of September, 1857, made, in writing, the following assignment to complainants:
“Whereas, the firm of Craig & Bro. are liable, by way of endorsement and otherwise, for the undersigned, Frost & Bradley, for over the sum of ten thousand dollars, and said Frost & Bradley are desirous of paying and securing said Craig & Brother'; now, therefore, in consideration of said liability, we, the said Frost & Bradley, have, and hereby do sell, assign, transfer and set over to said Craig & Bro., all the following described property, situated at Lower Saginaw or Bay City, viz.: all the lumber we have at said place, supposed to be from three hundred thousand to four hundred thousand feet, being partly in raft and partly on the dock; all the logs we have at said place, sup*357 posed to be about a million feet; all the shingles, supposed to be from two hundred thousand to three hundred thousand ; all the lath, supposed to be about the same amount; the entire stock of goods in our store at that place, supposed to be fifteen hundred . dollars in value; two yoke of oxen; one two-horse wagon; one one-horse wagon; one horse, and one sail boat.
“Also, all the property hereinafter described situated at St. Charles, or on the way from St. Charles to said Lower Saginaw, to wit: all our lumber, supposed to be from two hundred thousand to three hundred thousand feet; all our lath, supposed to be one hundred and fifty thousand; all our shingles, supposed to be over one hundred and fifty thousand; all our logs, supposed to be from one million to two million feet; the entire stock of goods in store at St. Charles; two yoke of oxen; three horses; one lumber wagon; five tons of hay; one field of corn; one field of potatoes, and oats in the same field.
“ Said Craig & Bro. are authorized and clothed with full power to take possession of said property and to sell the same forthwith, and convert the same into money, and apply the proceeds to pay the debts for which they are liable as aforesaid, and to pay over the surplus to the undersigned.
' “ An inventory of said property is to be forthwith taken. Witness our hand, September 19, 1857, at Detroit.
(Signed) “Frost & Bradley.”
To this assignment, a schedule, or inventory, of the property, and its assumed value, was attached, which showed a total valuation of twenty-four thousand one hundred and eighty-nine dollars and fifty cents.
The bill states, that although the property at the time was estimated at about twenty-four thousand dollars, it was not, in its then condition, convertible into cash at that sum,’and yet, that it comprehended all the effects of the
The bill then chai’ges that the defendants Bradley, and especially Charles, committed numerous violations of duty, involving breaches of trust, and among them the fraudulent appropriation, for the private benefit and emolument of the Bradley brothers, of property belonging to the business under the assignment and succeeding agreement, and resulting in failure and refusal to apply the property or its proceeds, to the satisfaction of the first demands and subr sequent advances of complainants. The bill likewise charges that the defendants have refused to account for the property connected with the said business.
This outline will sufficiently indicate the character of the ease, as represented by the bill, and lead to an understanding of the point upon which I think our decision may rest.
It will be observed that the existing controversy is between the immediate parties 'to the alleged arrangements, and is not made to concern independent creditors.
According to the bill, the injury complained of was caused by infringements of direct contract duties and
It is, therefore, necessary, if possible, to gather from the statements of the various arrangements, the nature of these final relations.
We find that, by the writing of the 196h of September, 1857, the firm of Frost & Bradley transferred to complainants, the logs, lumber, merchandise, teams, and other personal property, at Lower Saginaw and St. Charles, and on the way to Lower Saginaw, but upon trust, to sell and apply the proceeds as directed by the instrument. The effect of this as between the parties, was to convey the legal title of this property to complainants, and to require them within a reasonable time to sell it, apply the proceeds on the firm debts for which complainants were liable, and pay the balance, if any, tc Frost & Bradley. The title to all this property and the power to dispose of it, were, as to these parties, effectually separated from the ownership and power of disposition of the mills, vessels, and other unassigned property. Upon acceptance of the assignment, and in the absence of any intervention by other parties, it was in the power of Frost & Bradley to compel the complainants to execute the trust according to its import.
The succeeding verbal arrangements, as set forth, however, completely changed all this. Assuming them to havo been made as stated, Frost & Bradley, after they were entered into, could not compel the execution of the trusts mani
These new arrangements were not contrived as mere aids for the execution of the primary scheme. They were not merely subsidiary, but fundamental and repugnant. The products were to be, not the proceeds of the assigned property, but the blended results of all the proposed elements and agencies, and the returns worked out of the combined elements and operations, were not to be applied solely to pay the demands for which the complainants were liable on the 19th of September, 1857, and leaving the balance, if any, to be paid to Frost & Bradley, but they were to be used in satisfying those demands, and also to repay to complainants all new advances.
As already stated, it then appears upon the statements ■of the bill, that the parties by their voluntary action, subsequent to the written assignment, adopted a new and inconsistent scheme, and thereby superseded and subverted whatever trust was created by that assignment. Whatever claim for relief the complainants have, then, upon any supposable theory of the bill, must depend upon whether the alleged new arrangements and relations were entered into as
■The .complainants having compelled the defendant, Charles Bradley, to make answer on oath, his response is naturally the first thing to be looked at, In his first answer he denies that any such agreement as that alleged, was ever made. But he there admits that an agreement was made relative to the property assigned, and that he was thereby to convert the assigned logs into lumber by the use of the mills, and to sell such lumber with the other assigned property. He denies that other logs were to be obtained to continue the business, or that the mills were to be used for the benefit of complainants, beyond their use in sawing the assigned logs. He also denies that complainants were to furnish moneys to go on with the business, further' than should be necessary to enable him to run the mills while cutting such logs, and to enable him to sell the lumber and other assigned property.
He further denies that he was to go on and manage the business for complainants free of charge, or that his brothers were to continue in charge, under his direction, until the business should be closed, or that his brothers agreed to do so. He also denies that complainants took charge of the business carried on at the mills, or that the earnings of the vessels, or what could be saved of their value, was to be applied under the trust created by the assignment.
Subsequently, and in answer to the fifth and sixth special interrogatories, he insists upon the correctness of the version given in this answer.
In'his further answer of July, 1870, he says that the
On his direct examination as a witness, the complainant,, William H.' Craig, speaking in reference to this subject,, says: “That defendant Bradley did not, in some respects, fully state the agreements entered into, while in others, he misstated them, or so stated them as not -to give a clear understanding of the arrangements.” .
He then proceeds to give his own version, as follows: “Soon after the assignment, Mr. Bradley was very desirous that we should let the lumber assigned, go forward to Chicago to be sold. He proposed that if we would do so, that'
“It was understood between us, that some advances from us would be necessary to carry on the business, in addition to'the property assigned] and when I was at St. Charles and Lower Saginaw, soon after the assignment, I looked the property over at those points, as well as the logs, lumber, and shingles, in transit from St. Charles to Lower Saginaw, and concluded there was about the amount stated in the assignment, both of logs, lumber, and shingles, merchandise, etc.' While at St. Charles, I had conversation with Nathan B. Bradley, who was in charge there, and with Charles Bradley. We stated to him the condition of things, and the course proposed to be pursued, viz.: the manufacturing the logs into lumber and shingles, and the transporting the same to Bay City, on the terms above set forth, to which Nathan B. Bradley assented fully.
“ I then gave directions to N. B., to proceed to manufacture the logs into lumber, and to transport the same to Bay City, as he had done for Frost & Bradley. I stated to the laborers at the mills, that I would be responsible for their wages. N. B. then gave me an order for some supplies, — pork, flour, butter, or other supplies, which I forwarded as requested by him, and we continued to furnish supplies as wanted by him thereafter.
“On my return to Detroit, I conferred with many of the creditors, to whom I made a full statement as to how I. found things at Saginaw, and that I thought there was property enough to pay all claims; and I stated, also, Charles’ proposition to use the mills, vessels, himself and brothers, to manufacture the lumber, transport the same to Chicago, and sell it there. The creditors decided to leave the matter wholly to me, and I, being of the opinion that there could be a saving made, as Charles had stated, over the liabilities, and feeling anxious to make such saving, consented to Charles’ proposition to let the lumber go forward to Chicago, to which end the mills and vessels were to be used as before stated.
“ Charles wished me to take the title to the vessels in my name, but in consideration of the amount of the incumbrances, I declined, believing I should be exposed to damages
After detailing an arrangement to employ certain other ■vessels in the concern, Mr. Craig further states, that it was afterwards agreed with Charles Bradley that complainants ■should put in the one million one hundred thousand feet ■of logs mentioned in the bill, and that they should be manufactured and disposed of in the same way as the assigned logs, but that complainants should be paid a fair consideration therefor, which Mr. Craig swears was from four dollars and fifty cents to five dollars per thousand.
On his cross-examination, he says that the first agreement after the assignment, was made at Saginaw or St. ■Charles about- ten days after the assignment, and was verbal, and that he does not recollect that any one besides himself and Charles Bradley was present. He says further ■that the terms were finally agreed upon at Detroit, and within two weeks after the visit to Saginaw; that the terms were, that Charles was to put in his vessels, mills, and whatever he had, his own time, and that of his brothers, and that complainants, on their part, were to furnish such supplies as should be needed; that such were the main features of the arrangement, and all of it which he recollects; that the “ business ” was to be carried on in the name of
This testimony of Mr. Craig constitutes complainants’ evidence of the nature of the verbal arrangement set up in the bill, as succeeding the written assignment,- and the case it makes on that subject is, in my judgment, materially different, upon any reasonable construction, from that the bill is understood as setting up. But it is quite unnecessary to pause for the purpose of indicating the supposed discrepancies, because it is believed that complainants have failed to prove, by sufficient evidence, any other arrangement subsequent to the written assignment, than such as
The testimony of Mr. Craig on the subject in question, is not only opposed to the answers, upon oath, of Charles Bradley, which the bill called for, but is contradicted by the evidence given by Charles Bradley, as a witness. He explicitly denied, when upon the stand, the making of any arrangement of the nature set forth in the bill, and the testimony of Nathan B., Frederick E., and Henry M. Bradley, so far as it bears on this branch of the case, rather favors the position of Charles, than that of complainants.
As these arrangements, which the complainants charge to have been made, were all verbal, and quite loose and indefinite, when most favorably considered, it is very possible that the minds of the parties never in fact met upon any precise terms.
But be this as it may, it appears to me certain, that complainants have failed to show, by a preponderance of evidence, the substance of the case they have stated as that entitling them to relief.
I think we may well feel less inclined to hesitate in deciding on this ground, because there are other difficulties in the way that are quite serious, and in the opinion of some of the judges, insuperable; and they grow out of the following combined circumstances, among others: The somewhat indeterminate and confused state of affairs and relations, depending on loose conversations, in occasional interviews and accidental meetings; the exhaustion of the assigned property, and the way and time in which it occurred; the subsequent adjustments and compromises; the admitted knowledge of complainants at the time, of ante
The decree of the circuit court in chancery, dismissing the bill, must be affirmed, with costs of this court.
I think the evidence in this case makes out very strong general equities, and that, except for subsequent transactions, there would be a valid claim for an accounting. The testimony is very strong in regard to the original claims of the complainants, and the unfair conduct of the principal defendant, and bears heavily on all the defendants, though more inferen tially.
But it appears by the bill that complainants became satisfied of the fraud of the defendants, as early as 1860, when it charges them with throwing off the mask, and setting complainants at defiance, and refusing to account, or to recognize any further liability.
The principles of equity require some diligence in the prosecution of frauds, and they absolutely forbid any such dealings, — after such discovery, — as indicate a design to waive the right to complain.
In this case there were at least two compromises, made deliberately, and with a full knowledge of the misconduct of defendants, whereby complainants obtained securities and paper, on which they realized considerable amounts; and by the last compromise, whereby they received endorsed paper, they agreed to transfer a considerable amount of the claims they held against Frost & Bradley, to Nathan B. Bradley, who was the endorser, thereby surrendering, if not
Although it is evident these arrangements were consented to under a strong pressure of pecuniary necessity, they do not differ in this regard from any other hard compromises; and having elected to mate them, and accept their fruits, complainants cannot afterwards prosecute their claims arising out of the original breaches of trust. Fraud may be waived and condoned; and a’ defrauded party must act consistently, or he will lose his right to complain of it.
I am reluctantly compelled to the conclusion that complainants have surrendered their equities arising out of the frauds complained of.